Deutsche Bank Settles Decade Long Texas Law Suit with FDIC Related to its Involvement in Impaired Loans Which Ultimately Created the Biggest Fraud and Financial Crisis in Recent History

Published; Dec. 23, 2019

Confirming LIT’s arguments, Deutsche Bank, the last hangout in a decade long Texas lawsuit by the FDIC, has settled, for a miniscule $150m – in effect, but not ‘legally’, accepting it knowingly sold toxic mortgages.

As the article below confirms, the US District Judge, an elderly and sick Sam Sparks (who should be retired), kept finding for Deutsche Bank right to the very end, most likely his decaying brain was still saying, ‘Deutsche Bank is too big to fail in Texas’.

Why would he say that, well just look at the data. Deutsche Bank has never lost a foreclosure case against a homeowner since the financial recession. It defies the facts of the settlement as discussed below, but when there is a corrupt judiciary, then that’s how it rolls in Texas courts.

p.s. If that news isn’t bad enough, LIT has also recently discovered that the “Chair” of the Commission for Lawyer Discipline is Ms. Noelle M. Reed, who, via her law firm, defended the Banks in this decade long case.

Published; Dec. 10, 2019

The FDIC alleged that banks made untrue, misleading statements about the quality of the mortgage loans in order to sell billions worth of residential mortgage-backed securities to Guaranty Bank, which failed in 2009.

It’s been more than a decade since the 2008 financial crisis and housing market crash, yet one piece of resulting litigation over mortgage-backed securities only recently concluded with a meager $150 million settlement.

The Federal Deposit Insurance Corp., which was acting as a receiver for the defunct Guaranty Bank and Deutsche Bank Securities Inc., entered into the settlement to resolve a claim under the Texas Securities Act. The FDIC alleged the banks made untrue, misleading statements about the quality of the mortgage loans in order to sell billions worth of residential mortgage-backed securities to Guaranty Bank, which failed in 2009.

Houston litigation boutique Yetter Coleman announced Monday the settlement between the parties came on the night before jury selection was set to begin in late October in the U.S. District Court for the Western District of Texas. The court on Nov. 21 dismissed the case.

“It is among the best pro rata recoveries by the FDIC among its successful pursuit of various mortgage-backed securities cases around the country,” Yetter Coleman said in a statement.

The litigation has been pending since 2012. The amended petition in FDIC v. Deutsche Bank Securities alleged that Guaranty Bank paid nearly $2 billion for certificates of residential mortgage-backed securities, which were issued, underwritten or sold by the defendants.

The plaintiff claimed the defendants made untrue, misleading statements about the mortgage loans backing the securities Guaranty Bank had purchased.

In addition to Deutsche Bank, the other defendants were GMAC RFC Securities, Goldman, Sachs & Co., J.P. Morgan Securities, The Bear Stearns Companies Inc., and Structured Asset Mortgage Investments II Inc.

Because of earlier settlements, Deutsche Bank was the sole remaining defendant. Its settlement ends the litigation.

Earlier in the case, the parties tussled over how to calculate the damages.

In September 2017, Deutsche Bank scored a victory when U.S. District Judge Sam Sparks granted partial summary judgment that sided with how the bank argued that damages should be calculated.

Yetter Coleman partner Bryce Callahan, who represented the FDIC, wrote in an email that the settlement is a well-deserved recovery for his client.

“Going into trial, our client’s claimed damages were just over $200 million,” Callahan said. “This was a hard fought case, with great trial lawyers on both sides. Big settlements take time.”

Deutsche Bank’s attorney, Andrew Frankel, a partner in Simpson Thacher & Bartlett in New York, declined to comment.

As Six Former Deutsche Bankers Are Convicted in Italy, We Look Back at the Deutsche Bankers that Never Testified, Because they Died in Suspicious Circumstances

Noelle M. Reed, chair, heads the Houston litigation practice for Skadden, Arps, Slate, Meagher & Flom. She has extensive experience representing clients in complex litigation in state and federal trial and appellate courts and arbitrations. She obtained her B.A. from Boston University in 1991 and her law degree from Harvard Law School in 1996.

Ms. Reed was a trial attorney with the Department of Justice’s Terrorism and Violent Crime Division and an assistant United States attorney in the Southern District of Texas. As a prosecutor, she handled criminal cases involving terrorism, public corruption, fraud, organized crime, drug trafficking, money laundering, environmental violations and tax offenses.

Notable client:

Bank of America mortgage backed securities litigation. Ms. Reed is lead counsel for Bank of America and its affiliates in litigation pending in federal and state courts in Texas.

Notable 5th Circuit Cases;

Fed. Deposit Ins. Corp. v. RBS Sec. Inc., 798 F.3d 244 (5th Cir. 2015) which included; Deutsche Bank Securities, Incorporated; Goldman Sachs & Company, Defendants–Appellees. Noelle M. Reed, Houston, TX, Andrew Tyler Frankel, Esq. (argued), Thomas C. Rice, Simpson, Thacher & Bartlett, L.L.P., New York, N.Y., Lisa A. Paulson, Shannon H. Ratliff, Ratliff Law Firm, Austin, TX, for Defendants–Appellees. 

JP Morgan Chase Bank, N.A. v. Datatreasury Corp., 823 F.3d 1006 (5th Cir. 2016) with Noelle M. Reed, Daniel Scott Mayerfeld, Skadden, Arps, Slate, Meagher & Flom, L.L.P., Houston, TX, Jennifer Haltom Doan, Esq., Haltom & Doan, Texarkana, TX, for Plaintiff, JP Morgan Chase.

Fake Companies, Fake Documents, and an Outrageous Foreclosure Judgment Should Receive Supreme Court Notice. Well, Not if You are Opposing Deutsche Bank, Ocwen or MERS

Much has been said recently in Ohio law concerning the enforcement of notes and foreclosures on mortgages.

In summary, the plaintiff must be the holder of the note and mortgage with the right of enforcement of both instruments in order to bring a meritorious foreclosure action in Ohio.1

What is the statute of limitations for a foreclosure action in Ohio?

Ohio law has two distinct statutes of limitation for enforcing notes and mortgages.

On one hand, actions to enforce a note must be brought within six years after the acceleration of the debt.2

On the other hand, the statute of limitations to foreclose on a mortgage is a far more generous 21 years.3

These conflicting limitations periods create quite a murky question of law as to when a mortgage foreclosure must be brought.

The Ohio Supreme Court in Deutsche Bank Nat’l Trust Co. v. Holden ruled that an action to collect on a note is separate and distinct from an action to foreclose on a mortgage.4

As a result, the bar of the note or other instrument secured by a mortgage does not necessarily bar an action on the mortgage.

Although the Ohio Supreme Court did not directly address the applicable statute of limitations in its Holden decision, at least one Ohio appellate court relied on Holden and allowed a mortgage foreclosure to proceed even after the note became time barred.5

While it would appear that some Ohio state courts will apply the more generous statute of limitations to mortgage foreclosures, that may no longer be the case because of a recent decision by the Federal Bankruptcy Court for the Northern District of Ohio in In re Fisher.6

In In re Fisher,7 after the mortgage lender filed a foreclosure in 2006, the debtor filed his first Chapter 13 bankruptcy in 2007 staying the foreclosure, and subsequently obtained a discharge in 2012.

Thereafter, the lender reactivated the 2006 foreclosure, but dismissed it in 2013.

The debtor failed to cure the mortgage delinquency.

As a result, the lender filed a second foreclosure in 2015.

The lender did not seek a money judgment on the note in the second foreclosure because of the prior bankruptcy discharge.

The second foreclosure pertained only to the enforcement of the lender’s mortgage.

While the second foreclosure was pending, the parties entered into a trial loan modification agreement. They did not, however, enter into a permanent modification agreement when the trial agreement expired. Instead, the debtor filed a second Chapter 13 bankruptcy in 2017.

The lender filed a proof of claim, but the debtor objected to the claim and filed a Motion for Summary arguing that the enforcement of the mortgage was time barred by the statute of limitations.

The debtor contended that the lender’s mortgage claim was merely incident to the note.

Despite the dismissal of the first foreclosure, and the payments made pursuant to the trial modification agreement, the debtor argued that he never cured the default following acceleration.

Therefore, he concluded that the lender should not be entitled to enforce the mortgage in the bankruptcy proceedings because the six-year statute of limitations for enforcement of the note already lapsed in 2012.

The lender countered, contending that prevailing Ohio law holds that the six-year limitations period applies only to personal collection of a note and not to an in rem action on a mortgage.

Therefore, the lender argued that its right to enforce the mortgage is a separate and distinct cause of action subject to the 21-year statute of limitations that had not expired.

The bankruptcy court determined that the lender had a valid in rem claim to make on its mortgage because the debtor’s personal liability on the note was discharged in his 2007 case, leaving the lender with recourse only against the debtor’s residence.

Nevertheless, according to the court, that claim could be disallowed and barred by the appropriate statute of limitations.

The bankruptcy court disregarded the Ohio Supreme Court’s Holden decision.

Instead, it favored the 1904 Ohio Supreme Court decision in Hopkins v. Clyde, which held that when a note is secured by the mortgage, the statute of limitations as to both is the same.8

The bankruptcy court noted that the Ohio Supreme Court in Holden did not specifically rule on the applicable statute of limitations for in rem foreclosure actions because that case was brought well within the six-year period.

Thus, it found that the Holden Court had not intended to apply the 21-year statute to an in rem action.

Instead, the Bankruptcy Court barred the lender from filing a claim by applying the Hopkins rule that the lender cannot maintain a mortgage claim after an action on the note is barred at the expiration of the six-year statute of limitations.

Although the In re Fisher decision is just one bankruptcy court decision, which is still subject to appeal, it is foreseeable that savvy debtors’ counsel will begin to raise this statute of limitations defense in state court foreclosure actions throughout Ohio, when applicable.

It is also likely that state courts will begin to apply the same logic as the bankruptcy court in In re Fisher, and therefore it would not be advisable for mortgage lenders to continue to rely on the more generous 21-year statute of limitations.

S.D. Fl. Judge Marra ruled Wed @Ocwen_Help can no longer assert a constitutional challenge to the @CFPB as an affirmative defense against the agency’s lawsuit accusing the mortgage servicer of pervasive misconduct, saying he’s rejected the challenge twice. https://t.co/oG1RS4w8oZ pic.twitter.com/MIlmSPFiae

— LawsInTexas (@lawsintexasusa) April 30, 2020